Libertarian law professor Richard Epstein has a new piece up at the Hoover Institution's Web site:
One of the enduring faiths of modern progressive thought is that omniscient policy makers can cancel out the errors of one form of economic intervention by implementing a second. That lesson was brought home to me when I was a third year student at Yale Law School, whenever discussion turned to the perennial debate over the minimum wage. The charge against the minimum wage was that it had to introduce some measure of unemployment into labor markets by raising wages above the market-clearing price. "Not to worry," came the confident reply. The way to handle that imperfection is to raise the level of welfare benefits in order to remove the dislocations created by the minimum wage. If one government program had its rough edges, a second government program could ride to the rescue. Implicit in this argument was the tantalizing, but fatal, assumption of economic abundance: The government has the power to tax, and with that power, has access to a cornucopia of public funds that never runs empty—at least until it does....this venerable two-part strategy does not, and cannot work. .... The proper approach is simple to state but hard to execute: Always seek "first-best" solutions. The correct response to any restriction on capital or labor is its prompt removal. A "second-best" effort to introduce some offsetting program only makes matters worse. The two errors do not cancel out. They cumulate.